The purpose of this thesis is to investigate the entry of renewable energy technologies
into Pacific Islands’ electricity markets, with particular focus on a new technology: the
Pelamis, a wave energy converter. Pacific Islands are endowed with various types of
renewable energy resources, yet they remain highly dependent on expensive fuel imports
for their energy requirements, using little renewable energy. This paradox is investigated
by studying the characteristics of Pacific Islands’ electricity markets, including a casestudy
on the entry of a new renewable energy technology, the Pelamis, into the electricity
market of Hawaii. The integration of renewable energy technologies into Pacific Islands’
electricity systems is then analysed from the point of view of an energy planner. The
recent application of portfolio analysis to energy planning has provided a new framework
to evaluate the different electricity generating options available to energy planners.
Taking both the generating cost and financial risk of each technology into account,
portfolio theory has been applied to various European countries, by comparing actual
generation portfolios to an efficient frontier showing the trade-off between energy
security and the cost of electricity generation. This framework has clear relevance to
Pacific Island Countries. However, the characteristics inherent to Pacific Island Countries
have important implications on the operation of their electricity systems, which are not
necessarily taken into account in portfolio analysis. In particular, geographical isolation
inhibits these countries from connecting to larger intercontinental grids, which
emphasizes the importance of reliability of supply. This thesis presents a mathematical
model which establishes a method for computing an optimal intertemporal path for
introducing renewable energy into a pre-existing electricity system. The model explicitly
allows for the cost of maintaining reliability of supply as intermittent generators are
integrated. The framework also incorporates concepts from Integrated Resource Planning
and portfolio analysis. Finally, policies for accelerating renewable energy development
are reviewed, and a discussion is provided on the policies which are likely to be most
suitable to Pacific Islands. One of the main conclusions of this thesis is that the amount of
backup capacity for renewable energy can be optimally minimized by diversifying the
mix of renewable energy resources in each island. In practice, this would require studying
the complementarities and loading curves of the various renewable resources available,
and comparing their total potential production, and the variability of this production, to
electricity demand. This would allow energy planners to model the inclusion of a
maximum amount of renewable energy using a minimum of backup capacity to maintain
system reliability, potentially leading to a more efficient implementation and formulation
of policies aimed at developing renewable energy generation in Pacific Islands.